The Biden administration has called for public comment on ways to reduce corruption in the US real estate market, as part of a broader effort to stamp out illicit financial activity.
The White House is paying particular attention to all-cash transactions in commercial and residential real estate, which senior officials warned were often conducted through shell companies and used to launder money.
It has proposed a nationwide expansion of reporting requirements that currently apply to all-cash purchases of residential properties valued at $300,000 or more in 12 metropolitan areas.
“Given the relative stability of the real estate sector as a store of value, the opacity of the real estate market, and gaps in industry regulation, the US real estate market continues to be used as a vehicle for money laundering and can involve businesses and professions that facilitate — even if unwittingly — acquisitions of real estate in the money laundering process,” the Treasury department’s Financial Crimes Enforcement Network, which will be leading the process, said in a statement on Monday.
The bureau’s acting director, Himamauli Das, added: “Addressing this risk will strengthen US national security and help protect the integrity of the US financial system.”
Ahead of crafting any regulation, the government is seeking input on which types of real estate should be subject to scrutiny, the dollar value threshold, the geographic scope of the rules and who should be subject to reporting requirements, among other queries.
Specific feedback will lead to more targeted reforms and will help to “minimise the burden” on the real estate industry, a senior administration official said.
The call for comment is one facet of a broader strategy unveiled on Monday to more aggressively root out corruption.
In addition to ramping up scrutiny on those closest to real estate transactions, the Biden administration pledged to designate more intelligence and diplomatic resources to anti-corruption efforts. It also plans to improve co-ordination with foreign governments and across domestic government agencies including the Treasury, state department and the commerce department.
It vowed to focus on high-risk sectors such as construction, transportation and natural resource extraction.
“The deleterious effects of corruption impact nearly all aspects of society,” the White House said in a statement on Monday. “It exacerbates social, political, and economic inequality and polarisation; impedes the ability of states to respond to public health crises or to deliver quality education; degrades the business environment and economic opportunity; drives conflict; and undermines faith in government.”
According to senior officials, the Treasury department will also impose a series of sanctions this week against individuals engaged in what they said were “malign activities” involving corruption, repression, organised crime and human rights abuses.
